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Hospitals See Consistent Growth Across Key Metrics, but High Drug and Supply Expenses Persist, According to New Strata Data  

June 26, 2024

Inpatient admissions see biggest increases as patient volumes rise 

CHICAGO – June 26, 2024 – The median year-to-date (YTD) operating margin for U.S. hospitals was 5% in May — a significant improvement over 0.7% in May 2023 — but high drug and supply expenses remain a concern, according to new data from Strata Decision Technology.  

The metric was up from 4.7% in April but down slightly from 5.2% in January. Margin changes over time, however, suggest ongoing financial instability for the sector. The median change in operating margin was up just 0.3 percentage point from May 2023 to May 2024 and down 0.9 percentage point from April to May 2024. 

High non-labor expenses are one factor contributing to that instability, as hospitals continue to feel the strain of elevated drug and supply expenses. Total drugs expense was up 8.3% and total supply expense increased 8.1% year-over-year (YOY) in May, pushing total non-labor expense up 7.3% over the same period. Total labor expense was up 4.4% YOY and total expense increased 5.7% YOY. 

“Hospital operating margin performance remains strong, as organizations see continued growth in both inpatient and outpatient gross revenues,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “At the same time, ongoing expense increases are just one of many challenges facing the industry. Healthcare leaders must stay vigilant as they navigate their organizations through those headwinds.” 

Growth in gross hospital revenues continued in May, but slowed somewhat compared to double-digit increases in April. Outpatient revenue again saw the biggest increases, with the metric rising 8% from May 2023 to May 2024. Inpatient revenue was up 6.7% YOY and gross operating revenue increased 7.7% YOY. May marked the 13th consecutive month of YOY growth for the three metrics. Meanwhile, net patient service revenue (NPSR) per adjusted discharge was nearly flat, up just 0.1% YOY and down 4.3% month-over-month in May. 

Patient volumes increased YOY across all metrics for healthcare organizations nationwide. Inpatient admissions had the biggest increase, rising 11.7% versus May 2022 and 6.1% versus May 2023 due in part to January’s expansion of the Two-Midnight Rule to Medicare Advantage patients. From May 2023 to May 2024, outpatient visits rose 3.3%, emergency department visits increased 2.3%, and observation visits rose 0.4%.  

Patient volumes also rose across all service lines YOY, according to the latest service line data from April. The growth was a reversal from the previous month, when patient volumes decreased YOY across all but two service lines. The cancer service line had the biggest jump at 15.5% across both inpatient and outpatient volumes from April 2023 to April 2024. 

High expenses also continue to pressure physician practices. The median, total direct expense per physician full-time equivalent (FTE) rose to $1.09 million for May annualized. That represents a 12.8% increase from 2023 and a 21.1% jump from 2022. High expenses contributed to double-digit increases in the level of investment needed to support physician practice operations. The median investment per physician FTE was $314,487 for the month (annualized), up 11.2% from 2023 and 17.8% from 2022. 

Source: Comparative Analytics

Read Strata’s Monthly Healthcare Industry Financial Benchmarks to learn more. 

About the Data  

This report uses data from Comparative Analytics and Strata’s StrataSphere® database. Comparative Analytics offers access to near real-time data drawn from more than 135,000 physicians from over 10,000 practices and 139 specialty categories, and from 500+ unique departments across more than 1,600 hospitals. Comparative Analytics also provides data and comparisons specific to a single organization for visibility into how their market is evolving. StrataSphere is a unique and comprehensive data-sharing platform that helps providers leverage the power of a network that represents approximately 25% of all provider spend in U.S. healthcare. This report incorporates data from 645 hospitals from 124 health systems with StrataJazz® Decision Support, as reported in the National Patient and Procedure Volume TrackerTM

About Strata Decision Technology  

Strata Decision Technology provides a cloud-based platform for software and service solutions to help organizations better analyze, plan, and perform in support of their missions. With the combination of Syntellis Performance Solutions’ Axiom solutions, more than 2,300 organizations rely on Strata to provide their financial analytics, planning, and performance solutions. Strata has been named the market leader for Business Decision Support for 18 consecutive years. By uniting these two industry leaders, Strata continues to deliver market-leading solutions and world-class service, with an increased focus on accelerating innovation. For more information, please go to   

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LinkedIn: Strata Decision Technology 

Media contact:  

Sally Brown, Inkhouse  

[email protected]